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Sun's strategy: "Red Shift" markets; Risk of Virtualization

This is an interesting multi-part series:

Product revenue is expected to be higher in 2008 with a competitive Sun server lineup for the first time in 7 years. However, this could be hampered by the current march to virtualization led by VMware. In fact, many companies and government agencies grabbing VMware are now dumping their physical hardware en masse for physical space and equipment savings. Nonetheless, this new server is Sun’s strategic move into the “red-shift” (SaaS, Web) markets that require highly scalable datacenters powered by high-performance computers.

Meanwhile, financial engineering continues. Previously, while indicating the company was bullish, Sun announced that it intended to repurchase $3 billion in a stock buyback program (Q4 2007 announcement). Since then Sun has bought back 244.6 million shares costing $1.25 billion (avg price of $5.11/share), not yet half way to the $3 billion target. Share buyback programs are generally a method to attempt to boost the share price by lowering the number of shares in float. Q4 2007 and Q1 2008 purchases where subsequently hampered when the price went from $5 to $6 per share with recent tech market run-up. November is now back at previous price levels, and may accelerate the program.

I am very curious about Sun's virtualization strategy, some what Jonathan will talk about tomorrow.

For the meantime check this out.


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